While many entrepreneurs would concede that they aren’t financial experts, when your business needs money, instinct takes over.In fact, I’d bet that most entrepreneurs would be able to identify the key elements of a business funding application straight away. A business plan that outlines exactly what you need the money for and how you’ll be able to pay it back is, of course, key. Keep in mind that lenders only lend once they’re fully convinced they’ll get their money back. Secondly, most entrepreneurs wouldn’t dream of approaching lenders without some numbers to back up their case. Including this type of information in your initial approach will save you time later, as lenders will insist on seeing it. Standard financial reports that most entrepreneurs are familiar with, such as your profit and loss and balance sheet, are a great place to start. If you’re including these two key components, then you’re automatically presenting a much better case than most. As we all know though, securing finance isn’t easy at the moment. If you want to give your application the greatest chance of success, you should also be including some extra details:
Principal asset informationAlthough the prospect of lenders using business assets as security might seem unappealing, you should remember it will help you secure finance. Unsecured loans are the preserve of established businesses with exceptional cashflow these days and most lenders will want to see some sort of security before they’re willing to lend. Also, remember that the alternative may be lenders asking for personal assets as security.
Key people detailsIt might sound a bit more like a pitch for Dragon’s Den than a funding application, but you really do need to sell your personal story to any finance provider. You need to demonstrate the experience within your executive team as well as how you or others have contributed financially to the business, as this demonstrates commitment to the cause.
Debtor and creditor listWhile term loans and overdrafts are scarce, a whole range of established and new players now offer invoice finance. Although this product has had some bad press in the past, it is one of the few products very much available right now. Therefore including your debtor and creditor lists will help increase your chances of accessing finance.
Existing financial facilitiesYou don’t want to see the opportunity of accessing finance disappear because you haven’t revealed existing financial arrangements. While it might sound tempting to not reveal these straight away, the sensible thing to do is to declare these arrangements so lenders can assess your case in full.
A cashflow reportIf you really want to see the full range of business funding options available, including a cashflow report in your application will make a huge difference. Only your main bank has access to this normally, so allowing other providers to see this will give them a much better idea whether you’ll be able to pay the money back or not. Joe Carstairs works at Funding Options, the online service that helps you find the right business finance solution from a range of products and providers. Follow them on Twitter @FundingOptions Picture source
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